• Apple's iPhones are so good it's a problem for Apple because people don't need to buy replacements.
• But the new AI features Apple showed off at WWDC will only work on Apple's newest phones and devices.
• So here's the key question: Are the new AI features enough to get you to buy a new iPhone?

What if your iPhone could scan, and understand, your emails and your texts and your calendar? So you could ask it when you're supposed to pick up your mom from the airport and where you're supposed to go to lunch afterward without looking through all of that stuff yourself?

That's the scenario Apple sketched out Monday, when it tried to explain how it was integrating AI into its ecosystem.

And that sounds … pretty good to me?

But let's reframe the question: Would you pay $800 — or a lot more — for an Apple device that does that stuff?

Because that's the key question for Apple, which says that all of the new AI features it announced at its developers conference will only be available on its top-of-the-line devices. That means the series 15 iPhones it debuted last fall, as well as its newest/most powerful iPads and Macs, and whatever new devices it rolls out later this year.

If the answer is "yes," then AI will be a very big deal for Apple because it will solve a very big problem: People aren't buying iPhones like they used to.

That problem is not a secret and is on full display when Apple announces iPhone sales numbers that show slowing growth — or, like it revealed last quarter — an actual decline.

And you can also see it in third-party reports about iPhone owners hanging on to their existing phones much longer than they used to.

In one way, this is a very high-quality problem for Apple — it makes phones so good that there's no reason to buy next year's model, or the one after that, or the one after that. (I can attest to this personally: I use an iPhone 13 that I got in 2021 and have yet to find any reason to swap it out for something new.)

But it's also a very real problem for Apple since Apple is in the business of selling expensive, high-margin hardware.

As we've discussed here before, Apple has tried to cope with this problem by emphasizing the growth of its "services" businesses, which can grow independently of its device sales. But it still really, really needs you — and me — to buy a new iPhone periodically to keep the whole thing humming.

If you were a deeply cynical person, or a journalist, you might wonder if Apple really needs its latest and greatest chips and other hardware to make the AI it is showing off work. You might suggest that this is just a convenient sales pitch for a company that can no longer say "Thinner!" or "Better camera!" and get people to pony up for a new phone.

But for argument's sake, let's assume that this is at least a bit true. (We do know, for starters, that the tech that powers stuff like ChatGPT requires an enormous amount of electricity. So maybe running it on your pocket computer requires a state-of-the-art pocket computer, too.)

So now, back to the main question: Is the stuff that Apple CEO Tim Cook showed off Monday amazing enough to make you buy a new phone, or iPad, or Mac?

Because I saw some hints of some pretty cool stuff, like the mom/airport scenario Apple says it can solve. But a lot of stuff didn't seem as impressive, like the ability to custom-create emojis in your text messages. (What's up with Apple's belief in emojis as a difference-maker?)

One reason this stuff may not have blown me away is that it may literally not be that big of a deal — just like talking poop emojis weren't a big deal in 2017. Or maybe it's that the most impressive uses of AI on iPhones won't show up until developers figure out cool new ways to use AI on iPhones — which is the whole rationale for showing this stuff off at a developers' conference.

But I do have a third, vibes-based theory about why the AI that Apple showed off didn't blow me away. It's that Apple is walking a fine line here: It wants you to think that AI is amazing — but not scary.

Because the amazing/scary dichotomy has been something we've become quite used to with other AI launches in the last few years: Chatbots like ChatGPT can convincingly "talk" to you — but can you trust anything they say? Image- and video-making tech like Midjourney and Sora can conjure amazing-looking scenes from scratch — but maybe they'll replace an entire industry? Etc.

And during Apple's Monday demo, the company played on both sides of that line: It would tell you that Apple's AI could instantly make your writing better. But it also made dark, fleeting references to other people's not-so-good AI. Like AI companies that store your data on "someone's AI cloud."

And that tension is most obvious in the name of the product itself: Apple doesn't call its AI "artificial intelligence" but "Apple Intelligence" — implicitly arguing that the other AIs aren't something you need to spend time worrying about.

Actually, it was pretty explicit. "This is AI for the rest of us," Apple executive Craig Federighi spelled out at the end of his presentation.

In Apple's framing, that's AI that's helpful, but not creepy; immediately useful, but not too disruptive. And, crucially: Cool enough to justify a new, very expensive purchase.

Are you buying it?

• Elon Musk seemed less than impressed with Apple's WWDC presentation Monday.
• He responded to posts on X about the new iPhone home screen and iPad Calculator app.
• Musk has been taking jabs at Apple for the better part of a decade.

Elon Musk seemed slightly underwhelmed by a handful of updates Apple announced Monday during its WWDC presentation.

Early on in the event, YouTube tech reviewer Marques Brownlee posted on X that the crowd cheered when Apple introduced an iPhone home screen revamp, allowing users to place app icons wherever they want.

The changes help make your iPhone wallpapers more visible, Apple said.

"Um ok," Musk retorted on X.

In addition to the ability to move app icons around, other changes coming to iOS 18 include a new look for icons in "dark mode" and the ability to adjust their tints.

Elsewhere during the presentation, Musk shared a laughing emoji in response to a meme joking that anticipation around the event wasn't squaring up with some of the more minor changes unveiled — namely, the new iPad Calculator app.

Viewers were clamoring for ambitious AI updates, according to the meme — which, to be fair, Apple did go on to deliver.

The native iPad Calculator, which Musk appeared to laugh at, goes beyond a scaled-up version of the existing one for iPhones.

A new Math Notes feature enables users to write down math problems with the Apple Pencil that the Calculator can solve — with the answer appearing in the same handwriting.

Neither Musk nor Apple immediately responded to requests for comment from Business Insider.

But perhaps the criticism shouldn't come as a surprise.

Musk has been taking jabs at Apple and its CEO, Tim Cook, for the better part of a decade — and in 2022, accused the hardware giant of market monopolization and opposing free speech.

The day after Thanksgiving in 2020, on the American bacchanal of consumerism known as Black Friday, a post appeared on WallStreetBets with a short video filmed in the parking lot of a nondescript strip mall.

A middle-aged guy came out of a GameStop store carrying a big white box containing a PlayStation 5, the newly released video game console from Sony. As he walked across the parking lot, the person holding the camera ran at the customer and pushed him to the ground, knocking the box out of his arms.

An accomplice of the cameraman, a young blond man in sweatpants and a red headband, swooped in from behind and, laughing, snatched up the PlayStation box and ran away at full speed, repeatedly spitting out the word PlayStation with deranged joy as he raced off.

The cackling of the thief made it a particularly sordid scene to watch. But in the inimitable style of WallStreetBets, the video, which had first appeared on Twitter, was pulled into a post and described amorally as a trading signal, and a very bullish one, for the store that sold the PlayStation 5—GameStop, or GME, as the company was known in the stock market.

The title and only words in the Reddit post put the thesis simply: "PS5 robbery outside of Gamestop, BULLISH long GME."

'Get in asap, we're going to Pluto'

GameStop was in some ways an odd stock for the subreddit, which had tended to go for futuristic technology companies like Tesla and Virgin Galactic. GameStop was more like a remnant of the past, and it was getting eaten alive by tech companies such as Amazon.

Since the era of the original Nintendos and Segas, GameStop had fallen on hard times. The video-game industry was booming, but much of the growth was coming from digital downloads and iPhone games, which didn't require going to a store.

The surviving GameStops were somewhat notorious for their stained carpets and musty smell. The video of the robbery captured the seedy feel of the outlets, which were often a few doors down from liquor stores and check-cashing depots.

As digital game downloads became more popular, many people assumed GameStop would go the way of Blockbuster, which had filed for bankruptcy after its physical videotapes lost out to the digital offerings on Netflix.

But on Black Friday, GameStop seemed to be getting an unlikely bump due to those new video-game consoles from Sony that had just been released and that were selling like hotcakes.

Sony had decided to include a slot for a game disk in the new PlayStations, which suggested that GameStop's physical stores might not be dead yet.

Everyone on WallStreetBets seemed to be aware of all these dynamics, thanks to the video-game-loving tendencies of the guys who hung out on the subreddit. Now they aimed their memes and their Robinhood accounts squarely at GameStop.

"Get in asap, we're going to Pluto," one longtime member wrote under the title "GME Gang Gang Gang Gang." The post showed a picture of a portfolio with $225,000 of call options on GameStop.

Part of the reason that GameStop had not broken out on WallStreetBets before this weekend was the rule Jaime Rogozinski, the founder of the subreddit, had put in place the previous spring banning posts about penny stocks and companies worth less than a billion dollars. GameStop had thousands of stores, but it was struggling so much that the whole company had essentially been valued as a penny stock.

On Black Friday, though, the company had broken through the one-billion- dollar threshold, and when the ban was removed, it was like a dam had broken.

The company surged past Tesla that day to become the most talked about stock on the subreddit. As the stock went up, Jordan Zazzara, the most active moderator on the subreddit, stayed glued to his desk, trying to contain the flood of posts about the latest meme stock.

"I've been literally staring at the sub and spamming things since market opened," Zazzara wrote a few hours into the day. "We're sending a message with dozens if not hundreds of temporary bans for low quality submissions. I've been banning since 9 a.m.," he added.

The posts coming in about GameStop reflected a remarkable degree of research and knowledge about the company. There were lengthy write-ups about the company's recent history, especially the news that a young billionaire named Ryan Cohen had bought a significant chunk of GameStop shares with an apparent interest in taking control of the company.

But there was also a lot of talk about how GameStop looked like many of the other big names that had broken out on WallStreetBets, given its unpopularity among hedge funds. Like Tesla and Palantir, GameStop was a popular stock to short among hedge funds, though GameStop took it to a whole new level.

Back in February, when Tesla had been one of the most heavily shorted stocks on Wall Street, hedge funds had borrowed around 20 percent of the company's shares to short them, a common way of measuring the degree of short interest or pessimism toward a company.

With GameStop, the short interest was five times as high, around 100 percent, which meant that hedge funds had borrowed essentially every single share of the company to short it. The early posts about these figures suggested that there was something offensive about the way Wall Street could borrow every single share a company had issued in order to bet on its demise.

The anger that began to pick up played right into the fury toward hedge funds that had emerged the previous month after Andrew Left of Citron Research had criticized and bet against the most popular stocks among retail investors.

GameStop seemed to offer a perfect opportunity to get some revenge.

If the crowd could push GameStop's stock up, they could make the hedge funds lose money on the big bets they had placed against GameStop. One popular post recalled the recent fight with Left and Citron Research to get the crowds riled up.

"How many times has a short screwed over your calls or positions because of a single Tweet ahem Citron/PLTR ahem or manipulated your stock to the point where you bought high and sold low?" one post asked.

"Well, here's a chance to redeem yourself."

'We're just trying to be careful'

Zazzara did not like the direction this was going. He had just cracked down on the efforts to take down Citron Research for fear that they would give Reddit an excuse to kill the subreddit. Now Zazzara went into action again, deleting posts that talked about pumping or squeezing GameStop.

"You know when you love your cat but it won't stop going on the fucking table and that's literally the one place you don't like it to be?" Zazzara asked. "That's how I feel about these GME posts that are using the 'P' and get in so we can cause an 'S' words that are no-nos."

He once again tried to convey that this was not about censorship: "We're not removing them because we want to impinge on your freedoms. We're just trying to be careful."

But in the days that followed, the stream of material about GameStop kept coming, and as Zazzara watched it all pour in, he could see that this was not just some pump-and-dump scheme orchestrated by a handful of people. There was a lot of very smart and detailed due diligence on GameStop, arising out of what looked to be a new kind of crowdsourced research effort unlike anything WallStreetBets had seen before.

The most visible new character on the subreddit was a guy who went by the username Uberkikz11. He wrote detailed posts arguing that GameStop had a much more promising outlook than the views coming out of Wall Street would suggest. To support his argument, Uberkikz11 relied on information he pulled from GameStop's financial filings and other data sources. Uberkikz11 had put what he said was a "majority of his net worth in GME" and he was eager to use social media to get the word out about the company's potential.

"I'm here to provide as much boots on the ground $GME intelligence as one man can deliver. Clearly I'm not doing all this financial modeling and scraping for nothing. I enjoy helping others here."

In real life, Uberkikz11 was a 31-year-old who lived in Tampa, Florida, and worked in middle management at the truck rental company Ryder. He said his odd username was from when he had been a tween soccer freak with the number 11 on his jersey.

Unlike most people on Reddit, who embraced the anonymity of social media, Uberkikz11 often mentioned his real name, Rod Alzmann, and his rather fuddy-duddy tastes, like the 2014 Chevy Bolt he drove and the Vanguard retirement account where he kept his GameStop options.

"I'm an 81-year-old man in a 31-year-old body," Alzmann joked.

But Alzmann emphasized that he was trying to do something very modern with his GameStop investment by harnessing the crowds on social media to pool their knowledge and resources so that they could compete against the hedge funds that always seemed to have such an edge over ordinary people.

Alzmann's most impressive project was an effort to estimate GameStop online revenues by collecting receipts from all the GameStop customers he met online. Alzmann had noticed that GameStop, unlike most stores, numbered its receipts sequentially. This meant that if he had receipts from the beginning of the day and others from the end of the day, he could estimate how many transactions the company had done.

During the Black Friday weekend, he had gone around asking everyone to send in their receipts as they bought their new PlayStations and Xboxes from GameStop.

"GME ORDER NUMBERS! SHARE YOUR ORDER NUMBERS HERE!" he had bayed on social media like some carnival hawker.

Alzmann used the data he gleaned to put together estimates on the company's quarterly revenues, which he frequently updated and promptly shared with his online followers.

The other person who came up in all the online conversations about GameStop was a character who went by the name Roaring Kitty. He appeared to do most of his work on YouTube, where he ran a regular livestream show that brought people together to talk about the latest news and data on GameStop. He had been ramping up the YouTube channel over the fall and by December he was holding court a few nights a week for several hours each time.

Roaring Kitty pulled up charts and documents as he spoke, but he also interacted frequently with the people who gathered in the live chat that ran alongside his video stream. Alzmann joined in the live chat and talked with Roaring Kitty and the others in attendance about their latest findings, constantly challenging them to find any detail that might make them reconsider their investment. They did not want to be bullish if being bullish was not supported by the evidence.

As they did this work, Roaring Kitty constantly made fun of himself and the others for their obsessive interest in this offbeat company.

"Who the HELL can talk about a single stock for 5 hours straight?!" he asked.

"I'll tell ya who . . . the Roaring Kitty crew."

Before December, because of the ban on posts about companies worth less than a billion dollars, most of the conversation about GameStop had been happening on other social media networks.

Roaring Kitty was one of the many online personalities who had been making a name on YouTube by talking about stocks and investing. There was even a new name going around for the financially focused influencers who were popping up in response to the post-COVID trading mania: finfluencers.

Another hub of conversation about GameStop was StockTwits, a Twitter-like messaging platform focused on investing. StockTwits had been founded during the financial crisis and now had around three million active accounts, about twice as many members as WallStreetBets.

StockTwits was often the butt of jokes on WallStreetBets because the unmoderated nature of the service made it overwhelming and attractive to scams and spam. But StockTwits offered some advantages over WallStreetBets, like allowing users to filter the conversation for particular stocks. This made it easy for fans of GameStop to find each other and chat.

Alzmann and a handful of other GameStop-obsessed investors had come together on StockTwits over the course of 2020 and used it as a place to meet up and chat during the day. This group, whose members began referring to themselves as the GME Owls, had hatched plans on StockTwits to get GameStop in front of the much larger masses on WallStreetBets around Thanksgiving.

These conversations about GameStop showed the way that a whole new media ecosystem dedicated to investing was growing up far beyond the bounds of WallStreetBets as the COVID lockdowns continued.

But in the conversations on YouTube and StockTwits, there had been increasing recognition that WallStreetBets exerted a kind of gravitational pull that none of the other sites could touch.

"If 1% of the active traders on WSB picked up 20 shares for shits and giggles, there's literally nothing left," one of the regulars on StockTwits wrote as the GME Owls began fanning out onto WallStreetBets after Black Friday.

In the week after Thanksgiving, the GME Owls from StockTwits put up a survey on WallStreetBets so they could get a sense of how many people from this rowdy crowd were buying the stock.

The 2,400 people who responded suggested that they had, as a group, bought 3.4 million shares of GameStop. That was enough to make WallStreetBets the seventh-largest holder of GameStop stock, ahead of some of the big Wall Street investment firms that had shown interest in the stock.

Some of the guys in StockTwits were skeptical of the attention span and staying power of the Reddit crew. But during the week after Thanksgiving, GameStop took a dip, and it seemed only to strengthen the resolve of the growing hordes on WallStreetBets.

"It turns out that with a culture can come strong convictions," one of the leading GME Owls wrote on StockTwits. "They actually ditched their option gambling ways and most have made a bid for shares to help the greater cause."

The most useful information that the GME Owls had uncovered in the fall of 2020 was about Ryan Cohen, the young billionaire who had purchased millions of GameStop shares earlier in the year. Cohen had not said much about his purchase publicly, but in regulatory filings he indicated that he was looking to buy enough shares so he could join GameStop's board and encourage the company to embrace the possibilities of e-commerce more fully.

Cohen had made his fortune by founding and running Chewy, an online pet store that was one of the only e-commerce start-ups that had successfully taken on Amazon. If Cohen could work his e-commerce magic on GameStop, the company might not be doomed by the rise of downloadable video games.

Alzmann and the other GME Owls obsessively tracked every new filing and bit of information from Cohen to see if he was moving ahead with his plans to remake GameStop. Alzmann went so far as to reach out to Cohen's lawyers to let Cohen know that the people gathering on WallStreetBets were behind him.

On WallStreetBets, Alzmann shared the growing evidence that Cohen was indeed planning to take a more active role at GameStop. This led to a surge of memes that portrayed Cohen as the hero of the ordinary guys in their battle against the villainous hedge funds.

This crowdsourced research and cheerleading paid off mid-December when Cohen made his latest filing, a letter he had just sent to the GameStop board. The letter indicated that Cohen was getting much more aggressive in his effort to change the company and was not going to take no for an answer. When the filing was made public, the stock shot up and the subreddit celebrated the news as vindication of all their hard work.

On CNBC, Jim Cramer had been watching and talking about the rise of GameStop warily as part of his long-standing fascination with the rise of retail investing.

At first, GameStop reminded him of the February gamma squeezes when the crowds had manipulatively seized on silly stocks like Virgin Galactic.

But when Cramer dug into the conversation happening around GameStop on WallStreetBets, he saw that something new and more sophisticated was happening.

"What I say to myself is 'Do not be a snob,'" he told his viewers. "If they're running GME, then do some work on it. Make sure that you know GME."

He said Wall Street was likely to continue viewing the Reddit and Robinhood crowds with the disdain that had marked most of the professional commentary to date. But Cramer said he was taking a different tack.

"The bottom line? I think it's time to stop disrespecting the younger investors who've nailed 2020 every step of the way. Start taking them seriously, even at this incredible run. It's not too late to join them."

From the book THE TROLLS OF WALL STREET by Nathaniel Popper. Copyright © 2024 by Nathaniel Popper. Reprinted by permission of Dey Street Books, an imprint of HarperCollins Publishers.

Nathaniel Popper is the author of Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.

• The US has plans to employ thousands of drones if China invades Taiwan, the top US admiral in the Pacific said. 
• The "unmanned hellscape" would buy the US time to come to the aid of Taiwan, he added.
• China's drills around the island last month raised questions about what a blockade or invasion would look like.

If China invades Taiwan, it may face a large, lethal drone force meant to make its military "miserable."

At least that's the plan, according to the top US admiral in the Pacific, who said the "Hellscape" strategy is designed to distract China and buy the US time to respond.

"I want to turn the Taiwan Strait into an unmanned hellscape using a number of classified capabilities," Adm. Samuel Paparo, the commander of US Indo-Pacific Command, told The Washington Post at the International Institute for Strategic Studies' Shangri-La Dialogue Summit.

In doing so, he said, "I can make their lives utterly miserable for a month, which buys me the time for the rest of everything."

The plan involves launching thousands of unmanned systems, from surface vessels and submarines to aerial drones, to fight Chinese invading forces as soon as they begin to cross the Taiwan Strait, effectively acting as a kind of first line of defense.

This type of strategy would require heavy investments in cheap, reliable drones, which the US has been doing with its Replicator initiative. Last year, the Department of Defense officially announced the program, which is a long-term plan to field thousands of autonomous systems.

While progress on the ambitious plan has been relatively quiet, there have been some signs of movement.

Back in March, Deputy Defense Secretary Kathleen Hicks said the Pentagon aims to spend $1 billion this fiscal year on Replicator. A few capabilities have been highlighted as necessary for the first drones in the program, and the Pentagon is working with defense partners to develop and acquire these systems.

Last summer, Hicks said Replicator aimed to counter China's "biggest advantage," which is its mass: "More ships. More missiles. More people." She said that "we'll counter the [People's Liberation Army's] mass with mass of our own, but ours will be harder to plan for, harder to hit, harder to beat."

The previous INDOPACOM commander said last year that US unmanned capabilities "will be an asymmetric advantage." He said "operational concepts that we are working through are going to help amplify our advantages in this theater," adding, "There's a term, hellscape, that we use."

Paparo's remarks on the "Hellscape" strategy come on the heels of a massive Chinese military drill around Taiwan, during which it effectively surrounded the island and showed off joint force capabilities.

While the exercise showed Taiwan and the US how quickly and easily China could employ a blockade, it was also a learning opportunity for the US military.

After the drills concluded, Paparo said they "looked like a rehearsal" for an invasion, telling Japan's Nikkei newspaper: "We watched it. We took note. We learned from it. And they helped us prepare for the future."

• Texting on your iPhone is about to look a lot more like Slack and email.
• iOS 18 will allow users to schedule text messages to be sent later, Apple announced at WWDC.
• Texts can also be formatted with bolding and italics and will have emoji reaction tapbacks.

Your iPhone is about to get some new features that'll make texting seem a lot more like email or Slack.

Apple's iOS 18 update will come with the ability to schedule text messages to be sent at a later time, it announced at its annual WWDC event on Monday. It's among the "most requested features" and can come in handy for things like sending a reminder or remembering to wish a friend happy birthday, said Ronak Shah, Apple's director of internet technologies product marketing.

Other new capabilities coming to iMessage include text formatting, such as using bolding, italics, strikethrough, or underlining. Apple is also adding emoji and sticker tapbacks you can use to react to a message.

Tapbacks are "one of the most popular ways to express yourself in messages," said Shah.

The emoji and sticker tapbacks go beyond the existing ones, which only include a thumbs up or down, heart, laugh, exclamation point, and question mark. Those are all getting a design refresh, however.

New text effects, including "shake" and "bloom," are also coming to jazz up your messages. Some will be automatically suggested based on your message, but you can also add any effect to any text.

• The iPhone is about to look more like an Android thanks to iOS 18.
• Apple's new operating system includes home screen customization options similar to Android devices.
• Some users have argued that Android phones are more innovative than their Apple counterparts.

Your iPhone will soon look more like an Android device.

IPhone users will soon be able to customize elements of the home screen as part of Apple's iOS 18 software update, the company announced at Monday's opening session of its Worldwide Developers Conference.

You'll be able to arrange app icons on your screen around your wallpaper photo of your dog, for instance, or add a colored tint to the icons, according to the presentation. All you'll have to do is press and hold on the home screen to make your selections. The icons and your wallpaper also have a new look in dark mode.

And in a feature reminiscent of Android Widgets, changes to the iPhone's Control Center mean that you'll be able to, say, swap out the flashlight button on your lock screen for something else.

"We wanted to make Control Center more extensible than ever, so now developers can include controls from their apps as well," Craig Federighi, Apple's senior vice president, software engineering, said during the WWDC presentation before using one such control from automaker Ford that can adjust the air conditioning in his car.

The level of customization caught the attention of tech fans on X, formerly known as Twitter.

"This is so horribly Android, I love and hate it. Thanks Apple," wrote a different user.

Another even suggested that the iOS18's new features could be enough to lure Android users to iPhones.

Android users have long argued that their devices are more innovative — and easier to customize exactly to their needs — than iPhones. Some iPhone users have come to agree after the release of the iPhone 15.

Android phones were the more popular choice among US consumers for years until 2022, when the number of iPhone users pulled ahead for the first time.

• Walmart is enjoying the results of a flywheel effect between three major trends.
• As inflation attracts more customers to the retailer, its relative costs come down.
• Lower costs translate to lower prices, bringing in still more customers and repeating the cycle.

With summer in full swing, Walmart continues to find its groove.

In a call with investors on Friday, executives at the retail giant revealed how the business is benefiting from a flywheel effect between three major trends.

The first element is inflation — both the lasting impact from the past few years as well as the slight uptick in the latest numbers.

US households across income brackets have come to Walmart seeking refuge from high prices elsewhere.

"During inflationary periods, we want to try to be the last to go up," Walmart US CEO John Furner said. "We want to remain low price for the customer as long as we can."

And a growing number of customers are also choosing to shop online. More customers and higher sales give Walmart the flexibility to lower the relative cost of offering goods and services. That plays into the second trend: lowering e-commerce fulfillment costs.

"Densification has been a big piece of that," CFO John David Rainey said, referring to the efficiency of delivering orders to more households in a given route.

Furner added that other "bifurcated" customers are increasingly placing an order online to pick up in-store, then buying more when they're in the shop getting their goods — and those fulfillment costs are negligible.

Walmart can then reinvest some of those savings into the third element: price cuts. Furner said there are currently some 7,000 items with reductions, or about 45% more than this time last year.

Those discounts (paired with improvements in the store fleet and a sharp merchandising strategy) bring in still more customers, the execs said, and the cycle repeats.

Taken together, that's a recipe for winning — and keeping — new customers, especially during a period of uncertainty in the consumer economy.

• Elliott Investment Management has called for changes at Southwest Airlines to fix what it says is poor performance.
• Southwest's share price has plummeted over 50% in three years, below March 2020 levels.
• The hedge fund's "Stronger Southwest" plan suggests new leadership and a review of the business model.

Southwest Airlines touts itself as the "LUV" carrier with its two free checked bags and comedic flight crews — a strategy that revolutionized low-cost air travel and earned the carrier a 47-year profitability streak from 1973 to 2019.

However, Elliott Investment Management said Monday that the airline's decades-old strategies aren't working in modern times and is calling for a management and board of directors overhaul as part of a plan it's calling "Stronger Southwest."

"Poor execution and leadership's stubborn unwillingness to evolve the Company's strategy have led to deeply disappointing results for shareholders, employees and customers alike," the activist investment firm said in a letter announcing a new $1.9 billion stake, that makes it among the company's largest shareholders.

Elliott blamed Southwest leadership's "rigid commitment" to the model it dreamt up decades ago for today's shortcomings. It specifically cited a major meltdown in December 2022 that affected millions of passengers, which stemmed from antiquated crew-scheduling systems and resulted in snowballing cancellations across the country.

"No senior executives were terminated for their role in the meltdown," it said. Elliott would also like to see new, outside talent on the board of directors.

Southwest's stock price has fallen more than 50% in three years, Elliot said, underperforming competitors and falling below 2020 levels.

"The mandate from the Board has been clear: Keep doing things the way they have always been done," the letter read. Elliott says its ideas could help the stock gain 77% to $49 per share.

Shares rose more than 7% in trading Monday after Elliott unveiled its stake.

Southwest says it's confident in its executive team

Southwest told Business Insider that it looks forward to "better understanding their views on our company" and defended its board and executive team.

"The Southwest Board of Directors is confident in our CEO and management's ability to execute against the company's strategic plan to drive long-term value for all shareholders, safely and reliably serve our customers, and deliver on our commitments to all of our stakeholders," a spokesperson said.

Raymond James' airline analyst Savanthi Syth said Southwest could improve its financial performance with better customer service and route enhancements, pointing to red-eye flights and the possible introduction of assigned seating.

"We are not surprised by activist interest in Southwest given the very strong franchise with valuable tangible and intangible assets," she said.

She also noted Southwest has "correctly" started to scale back its ambitious growth plans and has the opportunity to address outdated technology.

Elliott Management, which oversees $66 billion in assets, is one of the world's most feared activist hedge funds. Besides Southwest, the firm has also recently disclosed positions in Texas Instruments, mining company Anglo American, and Match Group, the online dating company behind Tinder.

"After 18 months of intensive research, we are convinced that Southwest represents the most compelling airline turnaround opportunity in the last two decades," Elliott said. "The significant investment we have made reflects our conviction that, with the right leadership, Southwest can regain its status as an industry-leading airline."